The following report is a comprehensive industry and company analysis of the Australian domestic airline industry and in particular Virgin Blue. The purpose of this report is to determine the success of Virgin Blue in the domestic airline industry and how it plans to position itself into the future. Success in this report is about being competitive and innovative in a challenging environment in order to meet the company’s desired goals. In order to be successful and to meet those goals the interests of the main stakeholders must be met.

The analysis uses Michael Porter’s 5 forces model for industry analysis and a SWOT for Virgin Blue. The analysis also includes a breakdown of Virgin Blue’s financial performance over the past 5 years. The report goes on to identify and discuss the companies main stakeholders as well as Virgin Blue’s corporate responsibilities.

The report finds that the domestic airline industry is not an attractive industry. It is a highly competitive industry operating in a volatile market where profits are low. Barriers to entry are high and rivalry is strong. The main competitors to Virgin Blue; Qantas, Jetstar & Tiger Airways are constantly looking for ways to differentiate, often through reducing costs and building brand loyalty, to maintain their competitive advantage.

Virgin Blue holds a strong position in the airline industry and has developed a number of key competitive advantages over their rivals. However, Virgin Blue’s financial performance has suffered over the past few years with falling or negative profits. New management and a fresh approach to business has resulted in a solid list of strategies for the future. These strategies aim to put Virgin Blue in a competitive position for future success. The main threats to the business are their competitors and market volatility.

Virgin Blue’s customers, shareholders and employees are the most important stakeholders. Employees are providing excellent service and customers are responding with their commitment to the business. Shareholder satisfaction is the main concern with a falling share price and no dividend payments.

Despite the difficulties in the global market Virgin Blue is positioned for future success.

2. Brief Introduction

The purpose of this report is to analyse the performance of Virgin Blue as a company and identify their level of success in the Australian airline industry. This is to determine current achievements and predict future performance. The analysis of the airline industry looks predominantly at the low-cost carriers using Michael Porter’s five forces model while the company analysis employs a SWOT. Financial analysis looks primarily at the firms ratio analysis. Key stakeholders are also identified. Detailed strategy evaluation is critical to a firms success. This is why I have analysed all aspects of the firms operations. I have used this evaluation to draw conclusions about Virgin Blue’s performance and future success.

3. Industry Analysis

Virgin Blue is part of the airline industry in Australia. My industry analysis looks specifically at the low-cost carriers strategic group; consisting of Virgin Blue, Jetstar, Qantas and Tiger Airways. Analysing competitive forces within an industry helps to identify a companies strengths and weaknesses Hill et al. (2007, p. 64). The analysis can also determine the overall attractiveness of the industry. I have completed this analysis using Michael Porter’s five forces model; the forces that shape competition within industry Hill et al. (2007, p. 64).

Generally competitive forces are strong in the Australian domestic airline industry with consistently low prices and reduced company profits. In simple terms, the aviation industry has been transformed from one characterised as relatively stable to one characterised as increasingly volatile and highly competitive Spiess and Waring (2005, p. 194). Companies are in constant battles for...

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